tv Tavis Smiley PBS January 26, 2011 1:00am-1:30am EST
>> people are locked into their homes and can't leave as easily, home, so they cant take advantage of job opportunities that require them to relocate. >> susie: many economists say there's a catch 22 for out of work home owners-- they can't move to take a new job because they can't sell their home. >> tom: and the bottom may not be here yet in housing. prices in eight major u.s. cities hit new lows since the housing bubble burst. you're watching "nightly business report" for tuesday, january 25. this is "nightly business report" with susie gharib and tom hudson. "nightly business report" is made possible by:
this program is made possible by contributions to your pbs station from viewers like you. thank you. captioning sponsored by wpbt >> tom: good evening and thanks for joining us. home prices continue their slump, susie. today's s&p case shiller index shows overall housing prices were down in november. >> susie: tom, housing is still one of the big trouble spots in the economy. here are a few key takeaways from today's report: home values dropped by 1.6% between november of 2009 and last year. home prices fell in 19 out of 20 cities tracked by the index. san diego was the only city to show a price increase.
eight cities hit new post-bubble lows in november: atlanta, charlotte, detroit, las vegas, miami, portland, seattle, and tampa. >> tom: this is not just bad news for home owners. as erika miller explains, some fear it threatens the economic recovery. >> reporter: this is the place many unemployed new yorkers come to look for jobs. there are lots of reasons people here want to work close to home. >> my daughter has a baby and is expecting one saturday. so that's two little grandbabies. so, you know, i just want to be close. >> the buildings department or fire department might not accept your license. so you might have to take the training all over again. >> reporter: but there's another reason many americans are reluctant to move for a job-- a weak housing market. the problem is many unemployed americans are unwilling to accept jobs in other parts of the country. that's because, in many cases, their homes are worth less than the mortgage. this means a less mobile workforce, and it is hurting the economic recovery.
in fact, the international monetary fund estimates roughly one out of every ten unemployed americans faces this situation. economist chris low says certain cities are feeling the fallout especially hard. >> in some cities, like detroit, where house prices are down as much as 50% in some neighborhoods, it could take a great many years to get back to normal, or to get back to prior levels. and as a result, i think we're going to see a higher level of structural unemployment than in prior cycles. >> reporter: historically, the housing market tends to lead the economy in recoveries, often by as much as a year. but economist cary leahey thinks it will be different this time. >> i would think, under reasonable economic forecasts going forward, the unemployment rate should fall toward 9% within 12 months and toward 8% by the end of 2012. the housing market will respond. but i think the labor market is going to respond first.
>> reporter: and that can't come soon enough for the job seekers at this new york office. >> basically, i've been out of work for three years. >> with the economy, you know, it's really hard. >> reporter: erika miller, "nightly business report," new york. >> tom: our housing coverage continues tomorrow. moodys.com chief economist mark zandi joins us to talk about why he's sees housing hitting a bottom this year. and from palm beach houses to miami condos, how one of the epicenters of the housing crisis is coming back. >> susie: here are the stories in tonight's nbr newswheel: despite those lower home prices, consumer confidence is at its highest level in eight months. the conference board's consumer confidence index climbed to 60.6 this month. that's up from 53.3 last month. while that reading is higher than economists expected, it's still far from the 90 level that indicates a healthy economy. higher confidence wasn't enough to boost stocks. the dow slipped three points,
the nasdaq gained nearly two, and the s&p 500 rose a fraction. big board volume was back above one billion shares while nasdaq volume held steady at just under two billion shares. shareholders of public companies will get to weigh in on the boss' paycheck. the s.e.c. approved today the "say on pay" rule part of the new dodd-frank act. shareholders can vote at least once every three years, starting this year. and despite increased scrutiny over pay, wall street bonuses dipped only slightly this year. a new survey by e-financial careers finds a majority of u.s. bankers got a bigger bonus than in 2009. about one in five saw their bonuses decline, while 8% didn't get one at all. still ahead, our word on the street is "commodities." we'll have ideas on how individual investors can put money in these fast-growing assets.
>> tom: google's going on a hiring spree. the search giant tells the associated press this will be its largest hiring year ever. it plans to add at least 6,200 employees to its total headcount in all departments. many will be at the company's headquarters in mountain view, california. that kind of hiring is music to the ears of president obama. tonight's state of the union address is focused on jobs, innovation and competitiveness, all done at a lower cost. the president also wants to freeze non-defense spending for five years. to see how this all adds up, washington bureau chief darren gersh spoke with white house domestic policy adviser melody barnes. he began by asking how the president defines competitiveness. >> we have to make sure, when you look at all of our global partner -- those that we're trading with, those we're competing with as we're trying to sell goods overseas, that we have the best workforce possible, the best educated workforce possible. that we're making the goods for the industries of the future.
so that people will want to buy american goods. so that people are able to work with american businesses. that we are helping create an environment in which american businesses are competitive both here and in around the globe. >> now, the president talks about maybeing investments. republicans say that's spending. what is the difference between the investments the president is going to talk about tonight and spending? >> well, the investments that the president is going to articulate, he is going to be talking about education. he is going to be talking about infrastructure, building and infrastructure that creates jobs. and also the kind of innovation that will make us more competitive. we believe it will be critical if our economy is to grow. in fact, we believe not doing that in the past is part of what put us in the position we found ourselves in january of 2009. that is smart investment. at the same time, we're pairing that with looking at the areas where things aren't working or we just decided we can't afford it any longer, and we're
going to be making cuts there. and the president is just as serious about that. but we have to balance those two things off if we want our economy to grow. >> the president is expected to talk about a five-year budget freeze. how are these new investments going to fit under that five-year budget freeze? >> pfou57house, and making surer financial house is in order, will not only make sure we're working more efficiently and effectively, but it means we have the room to make the investments that are smart, that will ensure our children are better educated and our workforce is better prepared. those two things are critical to his thinking in the way he is approaching this issue. >> a rot of economists, as you know, would say that the best investment we could possibly make is pay down the deficit. it will free up capital for a lot of other investments. what is the white house's argument back to them? >> the white house would say, we are addressing those issues. this is the president who put into place the fiscal
commission. he wanted to hear an idiological spectrum, and he has asked the head of finance and budget to take those considerations. and he will be putting forward a budget in a few weeks showing how he wants to address those issues of deficit spending and make those investments that are necessary. >> you mentioned from the fiscal commission. it seems like the president is going to ignore one of their central suggestions, which is we rein in social security and we have cuts in social security. >> a couple of things. one, on the issue of social security, the president has made a tenant the fact that we have to strengthen social security, both for those who are beneficiaries today, but to make sure it is available tomorrow. but he is very serious about engaging in a bipartisan conversation about this. all of this is part and parcel of his efforts to focus on the deficit in a smart way, and to take into consideration those
recommendations and determine how we should go forward. i think people should stay tuned and look at the budget in a few weeks. >> melody barnes, thank you for your time. >> thank you so much. >> susie: a different view of social security. former minnesota governor tim pawlenty offered a solution to keeping the program solvent. speaking today in new hampshire, the republican presidential contender, said one way to do it is by limiting social security payments to wealthier americans. pawlenty says his plan is not ideal, but it's reasonable, and could help deal with the nation's mounting national debt.
small movement with the major indices, but it really masked what was going on today in the markets. so let's get you updated in tonight's "market focus." the trading day ended mixed but only thanks to a last-hour rally. here's today's trade of the dow jones industrial average. just before 3>00 pm eastern, the index hit its low for the day, before shooting up in the last hour. a big contributor to the last hour rally was ibm. shares ended up just over 1%.
volume doubled and tonight's close is an all-time high. telecom stocks led the market, helped by verizon. while its quarterly earnings were a penny below estimates, wireless margins and subscribers grew. it expects next year's earnings growth to double from this year's level, thanks to iphone customers. shares of v-z saw both a volume and a price pop on its outlook. the stock gained 1.5%. among the laggards of the dow-- 3m. shares fell 2% as volume picked up. over the past year, shares have backed down from around $90 per share. the market didn't like 3m's results. earnings were a penny over estimates, but down from a year ago. 3m also raised its 2011 outlook,
but lower sales and margins for products like surgical masks and flat screen television parts were disappointing. a couple of big moves off of earnings. tellabs saw a big pop in volume. shares plunged to a new 52-week low. profit margins dropped and its revenue outlook was below street estimates. also seeing a big volume jump was corning. it came as shares jumped to a new 52-week high. earnings came in under estimates, but revenues were better than predicted. and how about eastman kodak. remember that name? shares fell 13%. the u.s. international trade commission ruled against its claims that apple and research in motion use some of its patents. standard and poor's has proposed new ratings guidelines for bond insurers. there are worries they could mean downgrades if firms don't raise new capital or reduce risk.
among those getting hit, mbia. shares shed 7%. shares had seen a rally through last week. but the stock is down about 15% off this high. in the treasury bond market, meantime, interest rates fell as the fed began a two day interest rate meeting. this is a 180-session chart of the yield on a ten-year government bond. yields are near the bottom of the range they've been in for the past six months. remember, as yields fall, bond prices rise. yahoo results came in after the close tonight. earnings were two cents better than estimates, more than double from a year ago results. shares have seen some selling in the week leading up to tonight's earnings. they were down another 3% after the close, thanks to a downbeat forecast. tomorrow, look for television ratings company nielsen to go
public. shares priced at $23, above its expected range. it be the biggest ipo since general motors in november. and that's tonight's "market focus." >> tom: from cotton and cocoa to gold and copper, commodities have been red-hot. this bull market comes with new ways to put money into the commodity market. daniel dicker, senior contributor of
ofthestreet.com. didn't, welcome ba. back. what role do the commodities play? >> they're a divers fire. and it is something that people are looking into getting into. >> tom: what is a good target of how much of one's portfolio ought to be in hard assets or commodities? >> it is a new asset class. most money managers would say 15%, and a lot would say only half that. >> tom: it used to be be the market for professional people, but the exchange have opened up commodity markets to smaller investors. the first one, the one you call the most conservative are exchange-rated funds that follow commodity stocks. what do you mean here? >> these are the ones that represent a basket of commodity providers, like the x. l.e., which has a basket of oil producers, as opposed to something else that would be trying to follow the futures of
the swaps market in oil. >> tom: so not a commodity, rather a stock. and the second idea, the exchange rated funds, that follow the stock market. the g.l.d.? >> yes. these are very good because they have to follow exactly the price motion of the underlying commodity. the g.l.d. stockpiles gold for its shareholderring. and so anybod anybody investing is getting gold. >> tom: and the funds that are risky are those who use commodity futures. >> it's difficult to headachmakea proxi and a stock . so they use futures and swaps to try to create that. in many ways they fail at it. >> tom: to that point, you're a former oil trader, as i mentioned. you mentioned the x. l.e. here is the difference in
how that is performed compared to the u.s.o. the x. l.e. up 40%, and the oil fund has actually lost money. what do you make of this difference? >> here you go. this is a reason to not -- you don't need to get involved in some of the financial-based e.t.f.s. when you have something like the x. l.e., where the integrated oil stocks are such a wonderful proxy for the crude oil price. >> tom: but we should point out it is not all commodity e.t.f.s. the gold miners' exchanged up, e.t.f., up 22%, and the gold fund, up 21%. a very close tracking. >> here you go again. there is really no need to get involved in some of the commodities physically based or futures based assets, when you have the stock based e.t.f.s that mirror the stock prices. >> tom: dan, any
disclosures? >> no, i don't have anything in these e.t.f.s. >> tom: word on the street, our guest this evening, dan dicker with thestreet.com. >> susie: here's what we're watching for tomorrow: the decision on interest rates from federal reserve policymakers, and we get quarterly results from starbucks, u.s. airways and qualcomm. also, hilary kramer is back as our "street critique" guest. send us your questions. email@example.com. >> susie: merrill lynch has agreed to pay $10 million to settle charges it used information on orders from customers to trade on its own behalf. the s.e.c. says the brokerage piggybacked its own trades based on what its institutional clients were doing. that's considered securities fraud. merrill admitted no wrongdoing in the settlement. the questionable trades were made in the years before merrill was bought by bank of america. >> tom: the owners of a new web
site think you'll be willing to pay seven bucks a month for stuff you can get for free elsewhere online. the site is called ongo.com. it pulls together news stories in one place-- no advertising. backers include publishers like "the new york times," "washington post," and "usa today." they hope readers will pony up cash for a one-stop, simple, aggregated news site with a clean, easy to read format. euu?
>> susie: canada's prime minister has declared this the year of the entrepreneur. he wants the private sector there to lead the charge of economic recovery by spurring innovation and job creation. tonight's commentator has a message of encouragement and advice for all entrepreneurs. he's alfred edmond, jr., senior vice president and editor-at- large at "black enterprise." >> so 2011 is the year-- the official established date of your brand new business. here's some advice to boost your chances of success. first, to master entrepreneurship, actively seek out classes, as well as successful role models to learn from. make business programs, publications and web sites, staples in your media diet. second, know what your goods and services are worth, what the
competition is charging, and how much you must make to earn a profit. then, set your prices accordingly and stick to them. finally, stay connected. don't be so focused on business operations that you isolate yourself from the only network of people who will understand your journey-- other entrepreneurs. join industry groups, attend conferences, and commit to a strategy of engagement on social media platforms such as linkedin. i wish you all the best in your quest to excel as a business owner. do well. our economy is counting on you. i'm alfred edmond, jr. >> tom: finally, you're probably watching this as you wind down your day. but are you worried about a sleepless night? a chinese company thinks it has the perfect remedy for stress and insomnia. nick mackie has details on a hat that hopes to be a hit here in the u.s. >> reporter: no, they're not recruiting extras for a sci-fi movie. the folk here are taking time out to try out a high-tech massage, courtesy of breo. some opt for a mask, which
should relieve tiredness around the eyes, while others wear one of the $200 space-age helmets. they vibrate, apply heat, and relax you with music, while administering a firm, mood- changing therapy. >> ( translated ): this one applies and releases pressure, while the other one massages by knocking on your head. i prefer the other one. >> reporter: the exterior is german designed; while the insides, with the massaging functions, are developed by breo's in-house team, which combines technology with the principles of traditional chinese medicine to relieve fatigue, anxiety and stress. breo is the world's leading company in eye- and head-massage technology. its main market is china, where it has 200 retail outlets. the brand exports throughout southeast asia, and its 900 staff here in shenzhen also assemble massage devices for others, including brookstone in the united states.
breo is one company on the pearl river delta that didn't lose sleep when the financial crisis hit. sales have grown consistently in recent years by 35%, with turnover now some u.s. $30 million. the u.s. order book is still pretty thin, but breo says that 2011 is the year when it'll focus on destressing americans. apollo ma is the company's founder and sole shareholder. he began selling massage devices, door-to-door, 15 years ago. breo's first decade was all about survival. now it's in the money, mr. ma believes the time is right to develop solutions for arguably the world's most demanding consumers. >> because i think the american people also have so many pressures and sleep not well, so we think that maybe in some time we can prepare good things for them. >> reporter: breo is especially
interested in developing music for relaxation-- not just through what you hear, but more by employing the vibration caused by different wavelengths. this prototype massage cushion responds to music stored on a mobile phone. the company hopes it can, in future, develop applications, even devices with its most favorite corporate role model. >> it's a very special experience for the music. we can provide some product for maybe apple. >> reporter: for now, it's down to the less-than-relaxing job of trying to get ahead in a new market. nick mackie, "nightly business report," shenzhen. >> susie: that's "nightly business report" for tuesday, january 25. i'm susie gharib. good night, everyone, and good night to you, too, tom. >> tom: good night, susie. i'm tom hudson. good night, everyone. we hope to see all of you again tomorrow night. "nightly business report" is made possible by: